Graff Diamonds Sues Hong Kong Pawn Shop Over Diamond Stolen in 2007 Heist

Graff Diamonds Ltd. sued a Hong Kong pawn shop seeking the return of a yellow diamond that the jewelry retailer says was stolen from a London store in 2007.

The 16.64 carat diamond was part of more than $20 million in jewelry stolen from Graff’s store on Sloane Street in London on July 5, 2007, according to the complaint in New York State Supreme Court in Manhattan.

The pawn shop, Yau On Co., submitted a stone to the Gemological Institute of America, a non-profit group based in Carlsbad, California, that sets standards for gemstone quality, analysis, grading and certification, according to the complaint.

The institute determined that the stone submitted by Yau was the yellow diamond stolen in the robbery, which had at some point been recut and reconstituted as a 16.28 carat modified cushion cut diamond, according to the Jan. 6 complaint. Yau has refused to agree to allow the institute to return the stone, which is being held in a lab in New York pending resolution of the dispute, according to the complaint.

Graff is asking a judge to declare that it’s the true owner of the diamond and to order the jewel immediately returned to the company. It also seeks the costs of the lawsuit and attorney fees.

Pawn Shop Spokesman

Danny Hung, a spokesman for Yau On and the son of the owner, said in a phone interview that he wouldn’t have bought the stone had he known its history.

Hung said he took in the diamond from someone who he didn’t identify and that it was once owned by someone wealthy in mainland China. Hung said he had a certificate for the stone that wasn’t issued by the owner’s company and that he later found out it was a stolen item from London.

Graff is preparing to raise $1 billion in an IPO in Hong Kong next year, a person familiar with the matter said in November. The company’s founder and chairman, Laurence Graff, 73, who was listed at 459 on Forbes magazine’s list of worldwide billionaires in March with a net worth of $2.5 billion, has twice set records buying gems at auction.

The company was the victim of one of London’s largest diamond thefts, a 40-million-pound robbery at its New Bond Street store on Aug. 6, 2009. Five men were later convicted of the heist.

Michael Bono, an attorney with New York-based Wade Clark Mulcahy, which is representing Graff, said in an e-mail that the firm doesn’t comment on matters in litigation. Jessica Sachariason, a spokeswoman for the Gemological Institute of America, declined to comment on the suit.

The case is Graff Diamonds Ltd. vs. Yao On Co., 100171/2012, New York State Supreme Court (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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